Cost calculation in manufacturing – knowing what you know

In today's economic life, there is nothing worse than observing your profits and a lot of tiny little things on the periphery of the process. Employees consistently take too long to find the tools in the settings, and their scheduling scheme results in less production than capacity, one of which results in significant profits, while these profits are canceled by another loss.

What you need in a manufacturing or work shop today is the tool to determine which elements of your operations are not value-added activities. In addition, it would be good to identify the most important and most profitable profit centers. In order to handle the highest ROI with modern manufacturing operations, cost models should be used in order to understand what is happening through all processes.

To create understanding, you need information and action data that will make management decisions. The term interchangeable with Expense Accounts is often used Costing for data collection, measurement, interpretation, and periodic feedback for decision-makers and corporate stakeholders. What you feel afterwards is the fact that the actual cost refers to any specific program or activity in the production process. In fact, non-value-added activities are highly eroding profitability. Cost calculation takes care of all aspects of the operation (eg inventory, retail space, shopping, front office, shipping, etc.) and then uses a series of scenarios and equations to measure the profitability of individual companies.

If such cost accounting efforts are routinely performed, the results may have a huge positive impact on the company's full line. For example, some financial officers execute cost accounting at the end of each month, while some people count the costs daily to understand what works and what does not.

In short, it's just the consciousness that you know what you know and then you do something. This does not mean that the process cost always changes. In fact, certain costs (eg tools, mortgages / depreciation, quality control, etc.) are fixed fixed costs even in busy times compared to variable costs that work flexibly (eg direct labor, bulk breaks, shipping / distribution, etc.). Fixed Costs are becoming more and more valuable to managers as their value is created as a percentage of the products to be manufactured; Incorrect assignment of fixed costs to non-related products manufactured under the same roof often includes other factors such as fees and product prices. This is especially true if the manufacturer sees himself as part of a larger supply chain. This means that as a seller erroneously handles cost statements about pricing, the same error is repeated exponentially along the stream. In this way, Cost Accounting can be considered to convert the supply chain into financial values ​​.

According to capacity where Cost Computing has the greatest impact on manufacturers. So-called Transmission Accounting (revenue with less variable costs), this cost calculation is designed to maximize the utilization of the plants through scheduling. By maximizing the throughput, the amount of products displayed within the relative time of the door determines the profitability. In other words, there is usually a direct relationship between capacity and profitability. The goal is to prevent you from getting enough product to gain profits in a particular job or to accept a job that exceeds the capacity and therefore causes other problems (such as missed delivery, quality, etc.). In addition, it will be able to identify jobs that are not losing itself for many other reasons. For example, you run a job on a machine that uses more energy and manpower than estimated from the quotation.

This is just a very short and closer review of a production tool that is, in principle, a complex implementation. As data gathering is often such a big business, vendors are increasingly focusing on enterprise resource planning software that automatically collects plant information from work centers, and then quickly and easily compiles cost statements. But no matter how much you are committed to cost accounting, the most important element of each operation is to know what you know (19459003) at cost, evaluate this knowledge and then do something to make positive and profitable results.